Shares of Melco Resorts & Entertainment (NASDAQ:MLCO) fell more than 9% on Tuesday, and shares of Delta Air Lines (NYSE:DAL) and Royal Caribbean Cruises (NYSE:RCL) were each down by about 5%, on reports that suggest the coronavirus outbreak in China is spreading beyond China's borders. The World Health Organization is considering declaring an international public health emergency as a total of 291 cases have now been reported across major cities in China.

So what

The world is watching carefully as a coronavirus originating in Wuhan, China, is spreading across the country and is sparking fears that there could soon be a global outbreak similar to the spread of SARS in 2003. While the issue has mostly been contained to China so far, markets were likely spooked by an announcement by the U.S. Centers for Disease Control and Prevention (CDC) Tuesday that the first confirmed case has been found on U.S. soil.

Melco Resorts, a developer and owner of casino gaming and resort operations in Asia including a large presence in Macau, China, is among the western stocks seen as most vulnerable to being affected by the spreading coronavirus. Wynn Resorts (NASDAQ:WYNN) and Las Vegas Sands (NYSE:LVS) were also down on the fears. The casino and resort operators are concerned that the deadly outbreak could significantly lower attendance during the upcoming Chinese New Year holiday when many Chinese citizens travel and take vacation.

A traveler with a mask on.

Image source: Getty Images.

Shares of Delta and other airline stocks fell quickly in the early afternoon following the CDC announcement over similar travel concerns, which could prompt consumers to avoid getting on planes or delay travel plans. Delta, in particular, has targeted China for growth and owns a small stake in the country's China Eastern Airlines.

United Airlines Holdings (NASDAQ:UAL) shares fell more than 4%, and shares of American Airlines Group (NASDAQ:AAL) and Southwest Airlines (NYSE:LUV) were each down more than 2%.

Royal Caribbean's decline was likely also due to concerns that an outbreak would eat into cruise industry bookings. China accounts for about 5% of global cruise capacity but tends to be among the more lucrative destinations. Royal Caribbean, according to Wells Fargo research, generates about 6% of its capacity from China, higher than rivals Carnival (NYSE:CCL) or Norwegian Cruise Line Holdings (NYSE:NCLH).

Now what

There is no doubt the reporting surrounding the virus outbreak is a major concern, and the current outbreak could turn into a pandemic on a scale similar to the SARS outbreak. Investors should monitor developments closely.

However, it is also way too early to assume the worst, and investors need to be careful not to overreact to worrying headlines. Some early reporting is suggesting that this virus is not nearly as lethal as the SARS coronavirus. Of the three stocks mentioned that are down the most, Melco is the one that deserves the most scrutiny, because of its heavy exposure to China. Delta and the airlines figure to be, if nothing else, volatile as this plays out, and the cruise industry the most likely to weather the storm undamaged.

Investors need to buckle their seatbelts and prepare for turbulence. We're likely to see a lot more coronavirus headlines in the days and weeks to come.